New policy responds to investor requests for greater transparency at Allergan, including spending at the state and local levels and participation in industry trade associations.
Shareholders in Allergan and members of the Interfaith Center on Corporate Responsibility (ICCR) who have advocated for greater transparency around corporate funds used to lobby and advance policy agendas, welcomed the recent publication of a revised and much more detailed disclosure policy from the pharma company.
The new policy, Public Policy Engagement and Disclosure of Political Activities is being included on the Corporate Social Responsibility section of Allergan’s website and provides fuller disclosure related to:
- Allergan’s advocacy at the federal and state levels;
- Trade and other organizations receiving Allergan support in excess of $25,000, and;
- Allergan’s participation in political campaigns through political action committees or PACs.
Open Secrets estimates that in 2015 the pharmaceutical industry spent roughly $240 million on lobbying either directly or indirectly through trade associations like PhRMA. PhRMA is reportedly requiring member companies to invest an additional $100 million in preparation for lobbying campaigns to counter upcoming legislative battles over drug prices.
We appreciate Allergan’s responsiveness to shareholder advocacy that sought more transparency of corporate lobbying practices,
said Cathy Rowan, director of Socially Responsible Investing for Trinity Health, and leader of ICCR’s engagement with Allergan.
By disclosing its activities related to public policy, Allergan is addressing one of our major concerns and demonstrating leadership on a critical corporate governance issue.
The move came as a result of investor engagement on this issue including a 2016 shareholder proposal that received strong support at the company’s annual meeting. ICCR members were consulted during the drafting of the policy, and provided best practice models and indicated areas for improvement.
Said Rob Lively, Vice President Government Affairs at Allergan,
Allergan’s constructive dialogue with ICCR has resulted in further strengthening our lobbying disclosure, especially at the state level. We appreciate their engagement on issues of importance to shareholders.
In a December announcement regarding its Social Contract with Patients, Allergan made a strong commitment to limit branded drug prices to single-digit increases annually.
According to its report, Allergan spent roughly $5.1 million lobbying at the federal level in 2015 with an additional $1.5 million spent in individual states. Examples of key themes the company addresses through lobbying are:
- Intellectual property reform;
- Implementation issues related to the Affordable Care Act, and;
- Price transparency disclosure requirements.
Said Tim Smith of Walden Asset Management who participated in the Allergan engagement,
This new Allergan policy is a clear and welcome indication of the company’s openness regarding details of its lobbying policy and expenditures, and provides a model of disclosure for other companies to follow. The policy provides detail on both direct and indirect lobbying expenditures.